Tennessee Sports Betting Bill Filed

Tennessee has joined the list of states considering sports betting. The day after the midterms, Representative Rick Staples introduced a piece of legislation to legalize and regulate in-person and online sports betting in Tennessee.

HB 0001, also called the “Tennessee Sports Gaming Act,” imposes a reasonable 10% tax rate, calls for a $7500 licensing fee and authorizes online betting. Under the bill, a nine-person board is to be selected to form the Tennessee Gaming Commission to oversee sports betting and promulgate regulations necessary to protect the integrity of sports.

A reading of the text of the bill reveals a planned county-by-county approval process similar to how Louisiana recently legalized daily fantasy sports on a parish-by-parish basis. If HB 0001 passes, each county election commission is ordered to hold an election to authorize sports betting if one of two things happen:

The legislative body of the county votes in favor of holding a referendum

Or if a petition is able to gain the signatures of 10% of the qualified voters

This is likely to lead to a similar outcome as they had in Louisiana, but with Tennessee having legal sports betting in some counties and not in others.

Where in-person betting will be conducted remains a mystery at this point. Tennessee has no casinos or racetracks, which in most states are the entities allowed to apply for licenses to run retail sportsbooks. HB 0001 only addresses sportsbook locations with the following text:

“Upon application to and approval by the commission, a licensee may enter into an agreement with a third party to operate a sports book on the premises of the third party; provided, that the premises of the sports book where bettors place bets and receive payouts are maintained in an area separate and distinct from that part of the premises where the third party conducts its business.”

Other provisions in HB 0001 include:

Minimum age of 21 to bet on sports in Tennessee

Authorization of betting kiosks to be placed by licensed sportsbooks in the state

Prohibition of wagers on high school sporting events

Licensed operators must have a comprehensive policy related to how wagers are accepted, how winnings are paid and how suspicious wagers are reported

Customers must register in-person with a licensed operator before being allowed to place bets online or through betting kiosks

Customers only allowed to fund their accounts via cash, electronic bank transfer or other methods that are initiated with cash (in other words, it appears credit card deposits will be prohibited)

The Tennessee Gaming Commission will also be charged with issuing rules and regulations related to the following:

Record-keeping requirements for operators

Policies, procedures and processes to mitigate risks associated with money laundering and cheating

Types of wagers accepted and prohibited

What’s Next for Tennessee Sports Betting

HB 0001 is far from a done deal. It must still make its way through committees in the House before going to a full vote before the House. If it makes its way through the House, it will then go to the Senate for consideration and make its way through the process there. If both chambers pass the bill, it will be sent to the governor for his final signature before becoming law.

That leaves many potential hurdles between today and legal sports betting in Tennessee. Still, it’s a promising start for sports fans in Tennessee. Tennessee is generally not a very gambling-friendly state with no casinos or racetracks, but the state did manage to pass daily fantasy sports legislation in 2016.

Additionally, lawmakers will surely note that neighboring states are also moving on sports betting and will be sucking up dollars from out of state. Memphis is now within range of two states that have authorized sports betting to date: Arkansas and Mississippi.

Mississippi has already commenced sports betting, and Tunica is just an hour’s drive from Memphis. Earlier this year, Penn National Tunica General Manager Justin Carter expressed his delight over having a chance to serve customers from Memphis due to Tennessee’s lack of sports betting options.

However, the prospect of losing dollars to out-of-state sportsbooks may not necessarily be enough to convince lawmakers to legalize sports betting. For one, the presence of casinos in Tunica has failed to provide sufficient motivation for Tennessee to legalize casino gaming.

Second, sports betting itself is not generally a high-revenue activity. Most casinos consider sports betting to be more of an auxiliary service that serves to drive foot traffic into the door, but Tennessee’s lack of casinos renders that benefit moot. On the other hand, online sports betting can potentially be very profitable.

If HB 0001 does make it through the House and Senate, is still faces the risk of veto from incoming Governor Bill Lee. During a primary debate earlier this year, Bill Lee said he did not think the authors of the state constitution would have wanted sports betting and said that gambling is “not consistent with the values of this state.”

The bill does face some challenges, but we’ve seen legislation pop up and pass in other states that did not previously look likely to legalize sports betting. The threat of neighboring states legalizing sports betting and the fact that offshore betting sites will continue serving Tennessee bettors absent legal options at home could prove to be effective arguments in favor of passing the bill.